To say that 2020 has redefined the word “challenging” is an understatement. The whole world went through major challenges that had to be overcome. The industrial sector in Mexico was not the exception.
The industry in Mexico faced one of the greatest challenges in its history, and still came up on top
Starting the year with the first economic contraction in a decade, it was only going to get tougher. But the mexican industrial sector is as resilient as its economy is.
By the end of 2019, the production in Mexico receded 1.77%. It was mainly affected by the construction industry, which contracted 5% when investment fell. According to INEGI, the Mexican manufacturing industry was able to grow, albeit it only grew by 0.2%.
Nonetheless, by the start of 2020, Citibanamex analysts projected that there would be a gradual and modest recovery. It would be driven by an increase in external demand and a petroleum production stabilization.
“By 2020, the manufacturing and service industries in the United States are expected to lift off. With a stronger American market it is easier for the Mexican manufacturing industry to have a better performance,” stated Ernesto O’Farrill Santoscoy, President of Bursamétrica.
As we all know, the year was only starting.
The whole world stood still as the pandemic took over
The COVID-19 pandemic extended through the whole world, and with that we all went into lockdown. Industrial production in Mexico was affected, as was in every country. According to INEGI, by May 2020 the Mexican industry receded 30.7% compared to 2019. It was a sum of all industrial sectors taking a blow.
The manufacturing industry fell 37.1%, construction 36.3%, energy production, water and gas 13.1%, and mining 5.9%. Due to the pandemic, Mexican authorities ordered to stop all non-essential activities during April and May.
Nonetheless, the industrial sector in Mexico started to recover by the end of the second quarter.
Mexico showed early signs of industrial recovery
By July and with the industry being considered essential, the industrial sector in Mexico registered a growth of 6.9%. According to INEGI, the Mexican industry had been steadily recovering from the effects of the pandemic for two months.
During this period, mining and construction industries had a minor rebound. But the biggest improvement came from the manufacturing industry and electronics industry, with a recovery of 11% and 5.5% respectively. Within the former, the automotive industry played a major role in aiding the industry.
It seemed like the worst was all left behind, because the Mexican industrial sector continued to recover in the following months.
Still moving forward, major signs of industrial recovery
By the end of Q3, the Mexican industrial sector had been experiencing a good and constant recovery. The industrial real estate market in Mexico City ended the quarter in a positive note.
“The third quarter of 2020 is ending with a great perspective on recovery. This is thanks to construction activities being resumed and new clients being established in the area. These companies are focused in logistics, which is a sectros that is currently expanding and has a greater demand for land,” stated Fancisco Muñoz, CBRE Industrial and Logistics VP.
Within the automotive industry, production and exports raised by the end of Q3. According to INEGI, during October 347,829 units were produced, 8.79% more than the previous year. Exports went up 8.23%, reaching 280,474 vehicles.
This only shows how resilient the industrial sector in Mexico really is. After a long and challenging year, it is bound to recover yet again.
Working in such a resilient industry is beneficial for any company looking forward to future-proof their business. Thus, here at VYNMSA we would like to assist you in settling in Mexico.
We are one of the leading industrial real estate developers in Mexico. Plus, we have over 30 years of experience and have delivered over 500 projects to fully satisfied customers. We are also fully equipped to assist you in developing your BTS projects. All while offering lease and sale solutions that always have a win-win approach.
We also are Broker Friendly and have around 20 inventory buildings ready for immediate occupancy. This is a total space of 2 million SqFt across Northeast and Central Mexico.
Contact us and set shop in Mexico with VYNMSA and enjoy the country’s resilient industrial sector.
Sources: Reuters, El Economista, Forbes, Centro Urbano, El Financiero
